1 / 13

Understanding Product Costing in Manufacturing Processes

Learn the terminology, cost flows, and types of costs in manufacturing, merchandising, and service organizations. Explore direct labor, materials, overhead, nonmanufacturing costs, and the value chain.

gsprague
Download Presentation

Understanding Product Costing in Manufacturing Processes

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 2 Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

  2. Manufacturing, Merchandising and Service Organizations Manufacturing: Take raw materials and produce new products from them. Merchandising: Retail and wholesale merchandising companies sell products that someone else has manufactured. Service: Provide a service such as airlines, hospitals, repair shops, law firms, CPA firms.

  3. Product Costs in a Manufacturing Company Manufacturing Costs: Costs incurred in the factory or plant

  4. Product Costs in a Manufacturing Company Direct Labor Direct Materials Manufacturing Overhead

  5. Nonmanufacturing Costs Costs that are incurred outside the plant or factory and typically categorized as selling and administrative costs.

  6. Life-Cycle Costs and the Value Chain Production Direct Materials Direct Labor Manufacturing Overhead Research & Development Experiment materials Staff Product Development Design Specs Staff

  7. Life-Cycle Costs and the Value Chain Marketing Advertising and promotions Staff Distribution Vendors Trucks Drivers Customer Service Call Center personnel Phone and computer equipment

  8. Cost Flows in a Manufacturing Company When the product is sold, the product costs become: Cost of Goods Sold.

  9. Cost Flows in a Manufacturing Company Work in Process In Out Raw Materials In Out Beginning Inventory Beginning Inventory Raw Materials Used Raw Materials Used Purchases Cost of Goods Manufactured Ending Inventory Direct Labor Manufacturing Overhead Ending Inventory

  10. Cost Flows in a Manufacturing Company Work in Process In Out Finished Goods In Out Cost of Goods Sold In Out Beginning Inventory Cost of Goods Sold Cost of Goods Sold Cost of Goods Manufactured CGM Ending Inventory

  11. Cost Flows in a Manufacturing Company, JIT Environment Direct material, direct labor and overhead costs can essentially be accumulated directly in a cost of goods sold account.

  12. The Path to the Income Statement As products are produced As products are sold Direct Materials Balance Sheet Inventories Income Statement Direct Labor Factory Overhead Every period Period Costs

  13. End of Chapter 2 Can you follow the flow of costs?

More Related